GST fraud claims touch Rs 74,782 crore in FY26, Centre tells Parliament

MUMBAI: Some GST claims turned out to be more fiction than finance. The Centre detected 30,162 cases of fraudulent Input Tax Credit (ITC) claims involving Rs 74,782 crore during FY26, underscoring a sharp rise in GST-related tax evasion as enforcement agencies intensified scrutiny across sectors.

The figures were shared in the Rajya Sabha by Minister of State for Finance Pankaj Chaudhary, who said investigations during the financial year resulted in the arrest of 358 people linked to the fraud cases.

Gujarat recorded the highest number of detected cases at 12,511, involving alleged fraud worth Rs 12,633 crore. Maharashtra followed with 9,629 cases, although the value of suspected fraud was higher at Rs 18,320 crore.

The minister said the fraudulent claims were spread across multiple industries rather than being concentrated in a single sector. Manufacturing businesses dealing in steel, cement, textiles, plastics, paper, plywood and copper figured prominently among the cases, while irregularities were also detected in service sectors such as real estate, manpower supply and works contract services.

The latest figures point to a sharp increase in enforcement activity over the past three financial years. In FY25, tax authorities detected 15,283 fraudulent ITC claims worth Rs 58,773 crore, leading to 178 arrests. In FY24, officials uncovered 9,190 cases involving Rs 36,373 crore, with 182 people arrested.

The data suggests that while GST compliance monitoring has become increasingly technology-driven, enforcement agencies are also uncovering a growing volume of suspicious tax credit claims.

The government also flagged the misuse of forged identity documents to secure GST registrations.

According to Chaudhary, officials identified 1,517 fake GST registrations created using forged PAN and Aadhaar credentials during FY26. These entities were allegedly linked to Rs 9,940 crore in fraudulent ITC claims. Authorities arrested 60 individuals, while seven accused remain absconding.

By comparison, investigators detected 3,977 fake registrations linked to Rs 13,109 crore in FY25 and 5,699 registrations involving Rs 15,085 crore in FY24.

While the government did not identify specific industries behind the fake registrations, it reiterated that the broader fraud cases spanned both manufacturing and services.

The latest numbers highlight the scale of the challenge facing GST enforcement authorities. As tax fraud becomes more sophisticated, the government’s focus is increasingly shifting towards data-led investigations, tighter verification processes and stronger action against fake entities exploiting the indirect tax system.